A free-trade agreement worth tens of billions to the Australian economy could be just months away after Tony Abbott held one-on-one talks with China's Premier Li Keqiang on arrival in the southern resort island of Hainan on Wednesday.

Mr Abbott used the talks to promote his economic reform message, stressing that Australia welcomes foreign investment, has always needed foreign capital to develop and wants access to the billions of dollars held in China.

The deal would potentially give Chinese companies new access to direct investment in Australian companies and to lucrative development projects across resources and public infrastructure.

The visit, which was elevated to the highest level of a ''state'' visit, bringing all the pomp and ceremony afforded to the most powerful, is the third and final leg of Mr Abbott's northern Asia tour.

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China is pushing for greater access to investment in Australia, prompting speculation that the current threshold of $244 million which triggers automatic assessment by the powerful Foreign Investment Review Board, will be lifted in line with deals given to Japan and Korea.

A free trade agreement with China has long been regarded as a major boon for Australia, assuming it includes rights of Australian businesses to invest in China.

Australia is also pursuing greater rights to provide services in China in areas such as finance, health and ageing services and environmental water management.

After an official welcome and honour guard, the Prime Minister met Premier Li for his first official talks. High on the agenda was the hunt for MH370, a top issue for the Chinese leadership.

After clinching a last-minute trade agreement with Japan on Monday, and formalising a free trade deal with South Korea on Tuesday, Mr Abbott was expected to use his Wednesday meeting with Premier Li to push Australia's case for a free-trade agreement with China by his self-imposed deadline of the end of the year.